Lotte Innovate is an IT-services company that builds and runs corporate computer systems. As of Q1 2026, system integration (SI) was ₩215.6 billion, or 77% of revenue; system management (SM) was ₩52.7 billion, or 19%; and the EV-charging business was ₩12.9 billion, or 4%. SI and SM, once won, carry over into operations and maintenance, so the order backlog underpins revenue. In a corporate value-up plan on March 23 it reaffirmed a target of average annual revenue growth of 10% or more and a payout ratio of 30% or more through 2028, and preliminary results on April 30 confirmed Q1 operating profit +39.9% and controlling-interest net profit +31.8%, while a Line 9 signaling-system construction contract was also extended. What stands out lately is that the Q1 earnings recovery, a P/B of 0.60x, a dividend yield in the 4% range and the stated payout ratio of 30% or more are strengths; against this, revenue has stalled around ₩1.2 trillion for three years running so growth drivers are weak, and with the 2025 payout ratio at 106.6% — above earnings — the sustainability of the dividend depends on the earnings recovery holding.
At-a-glance assessment financial health · growth · profitability · valuation
- Revenue fell 0.9% year over year (3-year trend: falling).
- Most recent quarter (Q1 2026) revenue was 1.3% lower than a year earlier.
- Even versus the prior quarter (Q4 2025), revenue was 14.0% lower.
- ROE is 2.3% (controlling-interest basis). It is below the sector average.
- Operating margin is 2.7%.
- The P/E sits above the sector median, reflecting elevated expectations.
Ownership & governance As of 2025-12-31
Largest shareholder Lotte Corporation 66.1% (corporate)
Controlling bloc incl. related parties 66.2%
With the controlling bloc holding 66%, control is very secure but the free float is thin.
🔎 In-depth analysis
- Lotte Innovate is an IT-services company that builds and runs corporate computer systems.
- By revenue mix per its official Q1 2026 report, system integration (SI: designing, developing and delivering the information systems a client needs) is the largest at ₩215.6 billion, or 77% of the total.
- This includes metaverse- and AI-related builds.
- Next, system management (SM: an outsourcing business that takes over and runs a client's IT facilities and staff for operations and maintenance) is ₩52.7 billion, or 19%, and the EV-charging business — making and selling chargers and running the 'EVSIS' charging platform — is ₩12.9 billion, or 4%.
- In sum, the core business is SI and SM for group affiliates and outside clients, while EV charging, though small in weight, is a new axis the company wants to grow.
- SI and SM have the trait that once a client's system is taken on, it carries over into operations and maintenance, so the order backlog and contract extensions underpin revenue.
- The latest close is ₩16,570 and the market cap is ₩250.7 billion.
- The price sits below its 20-day line (₩18,109) and below its 60-day line (₩20,556).
- Trading beneath both its short- and mid-term moving averages, the trend is on the soft side.
- RSI (a gauge comparing upward and downward strength over the past 14 days on a 0-100 scale) is 31.9, a neutral level.
- The price is down 16.0% over one month and 17.2% over three months, and sits 31.9% below its 52-week high.
- Relative strength versus the KOSPI is 11 (on a 1-99 scale, converting the past year's return versus the index while weighting recent performance more heavily; higher means stronger than the market).
- That places it in roughly the top 90% of all stocks by strength.
- Over the past three months it lagged the index by 35.2%.
- Chart readings are best considered alongside trading volume and disclosure dates.
- On confirmed 2025 annual figures, the P/E (how many times one year's net profit the price is) is 25.22x and the P/B (how many times per-share net assets the price is) is 0.59x.
- ROE (how much it earns in a year on its equity) is 2.3% and the operating margin is 2.7%, so profitability is still on the low side, and the debt ratio (debt relative to equity) of 110.3% is at a sound level.
- The key here is not to read the trailing (past-year) P/E of 25.9x at face value as 'expensive.' That figure is calculated on 2025 net profit (₩9.9 billion), which fell sharply, and with operating and net profit recovering by double digits in Q1 2026 the company sits at an inflection where earnings are rising off the bottom.
- The forward (next-year expected) P/E reflecting the recovered earnings comes down considerably from the trailing figure.
- A P/B of 0.60x means the stock is priced below the net assets (per-share value) it holds, a clear undervaluation signal on an asset basis.
- The dividend yield is high at about 4% (₩700 per share), but the 2025 payout ratio (the share of earnings paid out as dividends) of 106.6% means it paid out more than a single year's net profit, so for the dividend to continue at this level, the earnings recovery confirmed in Q1 needs to take hold on an annual basis.
- Over five years, revenue rose from ₩930.0 billion in 2021 to ₩1.20 trillion in 2023, then slipped a touch to ₩1.18 trillion in 2024 and ₩1.17 trillion in 2025.
- The top line has stalled around ₩1.2 trillion for three years running.
- The profit trend is different.
- Operating profit dipped to ₩25.7 billion in 2024, then rebounded +22% to ₩31.4 billion in 2025, and most recently in Q1 2026, with revenue of ₩281.2 billion (-1.3% year over year) leaving the top line flat, operating profit rose +39.9% year over year to ₩9.7 billion and controlling-interest net profit rose +31.8% to ₩6.0 billion.
- In other words, revenue is similar but the money left over is rising fast — a textbook profitability-recovery phase.
- This recovery comes as low-margin projects are cleared and SI/SM operating revenue and infrastructure orders such as Line 9 flow through to profit, lifting the operating margin again.
- On a forward basis reflecting the recovered Q1 earnings, the forward P/E is clearly lower than the trailing P/E (25.9x) calculated on 2025 results that had shrunk to ₩9.9 billion.
- This points to this year's earnings coming clearly above last year's bottom, and with no basis to think next year and beyond will fall below this year, it is not a situation to view as a 'cycle peak.' Still, top-line growth remains stalled, so whether the earnings recovery extends into revenue growth is the next point to watch.
- The disclosure flow has three key points.
- First, in the March 23 corporate value-up plan (voluntary disclosure), the company reaffirmed medium-term targets through 2028 of average annual revenue growth of 10% or more, a 20% revenue share from new businesses such as mobility, and a payout ratio of 30% or more.
- Second, an April 30 preliminary-results disclosure confirmed a recovery with Q1 operating profit +39.9% and controlling-interest net profit +31.8% year over year, and on May 7-8 an IR was held to explain the Q1 results and business plans directly to investors.
- Third, an April 24 amendment disclosure for the Seoul Subway Line 9 signaling-system construction contract (about ₩25.9 billion, 2.47% of recent revenue) extended the contract period to July 2026, showing large infrastructure orders in the core SI business are continuing.
- All of these are facts confirmed directly from the official source documents and the company's IR rather than general news, and since revenue is recognized by progress, it is worth watching how they flow into quarterly results.
- The strengths are clear.
- Q1 operating and net profit recovered by double digits, the P/B of 0.60x has it trading below net assets, and with a dividend yield in the 4% range the company has set a payout ratio of 30% or more as a medium-term target.
- Even if the P/E calculated on past results looks somewhat high at 25.9x, earnings are rising off the bottom, so the forward P/E reflecting the recovered earnings comes down, and combined with the asset-based P/B it reads as closer to undervalued.
- The caution is the top line.
- Revenue has stalled around ₩1.2 trillion for three years running so growth drivers are weak, and with the 2025 payout ratio at 106.6% — above earnings — the dividend's sustainability depends on the earnings recovery holding.
- In sum, if a Q1-like earnings recovery carries through the year and SI orders such as Line 9 are realized as revenue, the low P/B and high dividend stand out as strengths; conversely, if the revenue stall drags on and the earnings recovery stalls, the high payout ratio works as a burden.
- In the end, the continuity of the earnings recovery is the key condition separating the strong and weak phases.
🔎 Valuation vs peers Inconclusive
Among large listed SI/IT-services companies, the group-affiliated SI firms most similar in business structure are used as the peer set; figures are the site's own calculations (on the current price).
| Peer | P/E | P/B | ROE |
|---|---|---|---|
| Samsung SDS | 19.18x | 1.47x | 7.66% |
| LG CNS | 15.75x | 2.35x | 14.93% |
| Hyundai AutoEver | 65.07x | 6.43x | 9.88% |
On position versus peers, the P/B (0.70x) is clearly lower than Samsung SDS (1.85), LG CNS (3.07) and Hyundai AutoEver (10.16), a discount on a net-asset basis. However, with ROE at 2.3% — below the peer group's (7.7-14.9%) — a low P/B does not by itself settle the case for undervaluation. The P/E of 30x is on 2025 trailing results, when earnings fell sharply, so it has the limitation of looking inflated in an earnings-inflection phase; converted onto a seasonality-approximated forward net profit reflecting the Q1 recovery (about ₩19.8 billion), it drops to around 15x. In other words, it looks expensive on past earnings and less burdensome on recovered earnings — two sides — so until the continuity of the earnings recovery is confirmed, it is left inconclusive.
Earnings outlook company-stated · verified
| Type | Period | Revenue | Operating profit | Net profit |
|---|---|---|---|---|
| Next quarter | Q2 2026 | approx. ₩287.8 billion | approx. ₩8.4 billion | approx. ₩3.5 billion |
Price history Close · MA20 · MA60
The latest close is ₩16,570 and the market capitalization is ₩250.7 billion. The price sits below its 20-day moving average (₩18,109) and below its 60-day moving average (₩20,556). It is under both its short- and medium-term moving averages, so the trend looks subdued. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 31.9, a neutral level. The one-month change is -16.0%, the three-month change is -17.2%, and the position relative to the 52-week high is -31.9%. Relative strength versus the KOSPI is 11 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 10% of all stocks. Over the past three months it lagged the index by 35.2%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Relative performance stock vs index · start = 100
Excess return vs index · 3M -35.22% / 6M -46.74% / 12M -69.21%
Key metrics vs sector median
Valuation
The P/E of 25.22x is above the sector median (19.18x). The P/B of 0.59x is below the sector median (1.93x).
Enterprise value (EV)
EV = market cap + net debt. It reflects cash and debt, so it captures the real cost of the whole business that market cap alone misses; lower multiples are cheaper relative to earnings or sales.
Intrinsic value (DCF estimate)
DCF (discounted cash flow) estimate — discount rate 10.4%, initial growth 4.0%→terminal 2.0%, 10-yr forecast, free-cash-flow basis. A reference range that shifts materially with assumptions.
Profitability & financials
Return on equity (ROE) is 2.3%, below the sector average (10.0%). The operating margin is 2.7%. The debt ratio is 110.3%, so the financial structure is moderate.
Growth FY2025 · annual report (consolidated)
| Item | 2023 | 2024 | 2025 | YoY |
|---|---|---|---|---|
| Revenue | $793.2M | $782.3M | $775.3M | -0.89% ↑ faster |
| Operating profit | $37.7M | $17.0M | $20.8M | +22.04% ↑ faster |
| Net profit | $27.8M | $8.5M | $6.6M | -22.64% ↑ faster |
| 5-year | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $616.4M | $694.4M | $793.2M | $782.3M | $775.3M |
| Operating profit | $26.5M | $22.7M | $37.7M | $17.0M | $20.8M |
| Net profit | $23.0M | $20.2M | $27.8M | $8.5M | $6.6M |
| Revenue CAGR | 4-yr avg 5.90% | ||||
Revenue fell 0.9% year over year (2023 ₩1.2 trillion → 2024 ₩1.2 trillion → 2025 ₩1.2 trillion), and the three-year trend is 'falling'. That said, the rate of decline narrowed from the prior year. Operating profit rose 22.0% year over year. Profit is growing at an accelerating pace. Over the 5 years on record, revenue compound annual growth (CAGR) is 5.9%. The two-year revenue CAGR is -1.1%. In the most recent quarter (Q1 2026), revenue was 1.3% lower than the same period a year earlier. Because quarterly results are relatively even in this industry, revenue also came in 14.0% lower than the prior quarter (Q4 2025), so the recent trend looks soft.
Latest quarterly results Q1 2026 · vs year-ago + prior quarter
Technical indicators
What stands out
- The dividend yield, at 4.2%, is on the high side.
Points to watch
- Revenue fell 0.9% year over year (3-year trend: falling).
- The price is high versus peers, so expectations already appear priced in.
Recent news & events searched · sourced
- 2026-03-23UpdateCorporate value-up plan (voluntary disclosure) — reaffirming targets through 2028 of 10%+ average annual revenue growth, a 20% revenue share from new businesses such as mobility, and a 30%+ payout ratioAs medium-term growth and shareholder-return targets set out by the company itself, it provides an official basis for a forward reading. That said, it does not include annual or quarterly revenue/profit target figures. Source
- 2026-04-30EarningsQ1 2026 preliminary results (fair disclosure) — revenue ₩281.2 billion (-1.3%), operating profit ₩9.7 billion (+39.9%), controlling-interest net profit ₩6.0 billion (+31.8%)Revenue is stalled but operating and net profit recovered sharply year over year. Whether the earnings recovery carries through the year is the key point to watch. Source
- 2026-04-30IRIR notice — Q1 2026 business results and briefing (domestic NDR on May 7-8)A venue where the company explains the Q1 results and business plans directly to investors; the IR materials are posted on the company website. Source
- 2026-04-24UpdateSeoul Subway Line 9 signaling-system construction contract amended (voluntary disclosure) — contract value ₩25.9 billion (2.47% of recent revenue), period extended to July 2026Shows that large infrastructure orders in the core SI business are continuing. Since revenue is recognized by progress, how it flows into quarterly results needs to be checked. Source
Figure cross-check computed ↔ external
Recent filings
- 2026-06-01Corporate governance report
- 2026-05-29Large-business-group status disclosure
- 2026-05-14PeriodicQuarterly report
- 2026-04-30OwnershipLargest-shareholder ownership change report
- 2026-04-30Disclosure
- 2026-04-30EarningsFair-disclosure notice
- 2026-04-24Single supply/sales contract (amended)
- 2026-03-31OwnershipLargest-shareholder ownership change report
- 2026-03-23Disclosure
- 2026-03-23Disclosure
- 2026-03-20Shareholders' meeting notice
- 2026-03-17OwnershipLargest-shareholder ownership change report
📖 Plain-language glossary — expand if you are new to this
- P/E
- How many times a year's net profit the price is worth (lower is cheaper relative to earnings). The P/E here is on trailing (last full-year) results; for companies whose earnings swing fast (memory chips and other cyclicals/high-growth), a forward P/E on this year's expected earnings is more accurate.
- P/B
- Price relative to net assets (equity). Around 1x means it trades near book value; below 1x means below book.
- P/S
- Price relative to a year's revenue — useful for growth companies with thin earnings.
- Net debt / EV
- Net debt = interest-bearing debt − cash. Negative means more cash than debt (net cash). EV (enterprise value) = market cap + net debt, closer to what it would cost to buy the whole business.
- EV/EBIT · EV/EBITDA · EV/Sales
- Enterprise value against operating profit (EBIT), EBITDA, or revenue. Unlike P/E these reflect debt and cash; lower is cheaper relative to earnings power or sales.
- FCF / FCF yield
- Free cash flow = operating cash − capex, the cash actually left over. FCF yield = FCF ÷ market cap; higher means more cash generated per unit of market value.
- Intrinsic value (DCF)
- Future free cash flow (or, for some capex-heavy but profitable names, forecast earnings) discounted to today to estimate per-share value. Because it shifts a lot with the discount-rate and growth assumptions, it is shown as a bear/base/bull range, and the basis and assumptions are disclosed in one line beneath it.
- ROE
- How much profit the company earns in a year on its equity (%). Higher means better returns on capital.
- EPS / BPS
- Earnings per share / net assets (book value) per share.
- Operating / net margin
- Profit left from the core business / final profit after tax and interest, per unit of revenue.
- Debt ratio
- Debt relative to equity (%). Higher means more reliance on borrowing (norms vary by sector).
- Current ratio
- Assets convertible to cash within a year against debt due within a year. Above 100% leaves some short-term headroom.
- Interest coverage
- How many times operating profit covers the interest owed. Below 1x means operating profit alone struggles to cover interest.
- Dividend yield / payout ratio
- The year's dividend as a % of today's price / the share of earnings paid out as dividends.
- Revenue CAGR
- Multi-year growth expressed as a single yearly average (compound annual growth rate).
- RSI (short-term signal)
- Whether recent price action is overheated or beaten down. Above 70 is overbought, below 30 oversold.
- MA20 / MA60 (moving averages)
- The 20- and 60-day average price. Price above them signals a firmer short-term trend.
- vs 52-week high
- How far below the past year's peak the price sits now (%).
All figures are for reference only; how they read varies by sector and over time.
Sources: Korea FSC market-price API (data.go.kr), OpenDART, KRX/KIND — public data only.
Bong Stocks presents public-data-based information for reference only. It is not investment advice and contains no target prices, ratings, or buy/sell recommendations. Verify independently before making any decision.